China income tax rate for foreigners: how to calculate?

China has an open-door policy for foreigners to work and start a business in China. Foreigners workers in China should obtain work permits and work-type residence permits in accordance with the regulations. Foreign-investment enterprises should submit the required paperwork and apply for company registration with the appropriate local authorities. They also need to have a comprehensive understanding of China’s tax rates, including China’s individual income tax rate and business tax rate in order to avoid working in violation of the law.

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Table of contents
China individual income tax rate 2024 How to calculate your personal income tax rate in China? China corporation or business tax rate 2024**¹ China tax for foreigners: Is there any tax specifically for expats? Foreigners in China: How do I know if I should pay tax or not in China? Wise: a cheap and hassle-free way to transfer your earnings out of China!

China individual income tax rate 2024

Who should pay income tax in China¹?

• Individuals who have a domicile in China or who do not have a residence but have resided in China for a total of 183 days in a taxable year are** resident individuals**. Resident individuals shall pay individual income tax (IIT) on income derived from within and outside China in accordance with the provisions of the Individual Income Tax Law of the People's Republic of China.
• Individuals who do not have a domicile and do not reside in China, or individuals who do not have a residence and have resided in China for less than 183 days in a taxable year, are non-resident individuals. Income derived by a non-resident individual from within the territory of China shall be subject to individual income tax (IIT) in accordance with the provisions of the Individual Income Tax Law of the People's Republic of China.

Scope of the various individual incomes¹:

1. Income from wages and salaries.
2. Income from remuneration for labour services.
3. Income from manuscripts.
4. Royalty income.
5. Business income.
6. Income from interest, dividends, and bonuses.
7. Income from property leasing.
8. Income from transfer of property.
9. Occasional income from winning prizes, jackpots, and lotteries.

Comprehensive income tax rates¹:

Income derived by resident individuals from** **items I-IV of the preceding paragraph is referred to as comprehensive income and is subject to individual income tax at seven progressive rates ranging from 3% to 45%, as follows:

Tier	Annual taxable income	Tax rate
1	Not exceeding RMB 36,000	3%
2	Over RMB 36,000 to RMB 144,000	10%
3	Over RMB 144,000 to RMB 300,000	20%
4	Over RMB 300,000 to RMB 420,000	25%
5	Over RMB 420,000 to RMB 660,000	30%
6	Over RMB 660,000 to RMB 960,000	35%
7	Over RMB 960000	45%

Note: Non-resident individuals who receive income from items I-IV shall calculate their individual income tax on a monthly or itemized basis.

How to calculate your personal income tax rate in China?

The following formula is used to determine personal income tax on wages:

Taxable amount = wage income - 5000 (tax exemption in 2023) - social welfare - special additional deductions - other deductions determined by law

Special additional deductions aim to help taxpayers reduce their financial burden and increase their disposable income. There are seven categories in total²:

Categories	Description of deductions	Subjects of deductions
Children's Education	Preschool education expenditure	From the age of three to the start of primary school
Expenditure on academic education	Primary and lower secondary education, general upper secondary education, secondary vocational, technical education, university specialist education, undergraduate education, master's degree education, doctoral degree education
Continuing education	Academic qualifications	In China
	Technical qualifications for skilled personnel	Year in which the certificate is obtained
	Vocational qualifications for professional and technical staff
Medical treatment for major illnesses	Expenditure on medical fees related to the basic medical insurance, after deducting the reimbursement from the medical insurance, the individual's burden exceeds 15,000 yuan in total.	Self/spouse/parents
Housing loan interest	Interest expenses on the first housing loan incurred by the person or his/her spouse for the purchase of a home in China using a commercial bank or a housing provident fund	Self/both spouses/one of the spouses
Housing rent	Deductions vary according to city size	Lessee
Elderly support	Expenditure by taxpayers on supporting one or more parents aged 60 or above, and grandparents aged 60 or above whose children have all died	The person himself/herself
Infant and child care	Expenditure on the care of infants and children under three years of age	Parents

There are many Chinese-English language individual income tax calculators for China that you can use. Simply enter the Chinese city you live in, your income (monthly or yearly), social welfare rate, and special additional deductions, and you'll be able to calculate your personal income tax in seconds.

Below we list a few of them:

• China Individual Income Tax (IIT) Calculator offered by Dezan Shira & Associates (in English)
• Income tax calculator China offered by Talent.com (in English)
• Individual tax wizard (in Chinese)
• Green Suodeshui (in Chinese)

China corporation or business tax rate 2024¹

Individual entrepreneurs, investors in sole proprietorships and partnerships are generally subject to individual income tax at five progressive rates ranging from 5% to 35%, as follows:

Tier	Annual taxable income	Tax rate
1	Not exceeding RMB 30,000	5%
2	Over RMB 30,000 to RMB 90,000	10%
3	Over RMB 90,000 to RMB 300,000	20%
4	Over RMB 300,000 to RMB 500,000	30%
5	Over RMB 500,000	35%

China tax for foreigners: Is there any tax specifically for expats?

In China, taxation is based on residency status, i.e. resident individuals and non-resident individuals. Foreign workers are entitled to the same personal income tax rate as Chinese citizens in accordance with the law³.

Foreigners in China: How do I know if I should pay tax or not in China?

We have discussed who is responsible for paying individual income tax in China. For foreigners working in China, the first step is to determine whether they are resident individuals or non-resident individuals.

Expats who are considered resident individuals of China should pay IIT（individual income tax on their worldwide income, while non-resident individuals only pay IIT on their China-sourced income¹.

In addition, like Chinese nationals, foreigners working in China are subject to a threshold of RMB 5,000 for personal income tax⁴.

Wise: A cheap and hassle-free way to transfer your earnings out of China!

For expats working in China, you’ll probably wish to send your legal earnings home after you’ve paid income tax in China. So make full use of Wise, which has been serving 16 million satisfied customers globally for their international transfers, to send money abroad. Both the Wise English app and its official website are available to transfer your income from China to over 160 countries in the world. It helps to save your money by using the mid-market exchange rate and a small upfront conversion fee.

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*This service is provided in partnership with a licensed third party payment provider in China.

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Source：

1. China State Taxation Administration: Individual Income Tax Law of the People's Republic of China
2. Shenzhen Tax Service . State Taxation Administration: 7 Special Additional Deductions for Individual Income Tax
3. South China Morning Post: China’s expat tax system: who pays and how does it work?
4. China Government Website: How much less will you pay in personal income tax with the 5,000 threshold to be implemented next month?